Electric Vehicles Market in India 2022

Electric Vehicles Market in India 2022

The EV market comprises the electric vehicles (EV), the services required for the EVs, battery supply chain, charging infrastructure, and the electricity system which are still at a nascent stage of growth. Electric vehicles (EV) account for 1% of vehicle sales in India. This market has not flourished yet because customers have concerns regarding battery life and availability of charging stations. However, the market is expected to grow over the next five years as the cost of EV components is expected to decline. Companies such as Olectra, Mahindra & Mahindra, JBM Auto, and Ather not only develop electric vehicles but also concentrate on the expansion of EV infrastructure. Other prominent players include Bajaj Auto, Hero Electric, Tata Motors, and Hyundai India

Market insights:

In FY 2021, about 236,800 EVs were sold in India. It is expected that the number of EVs sold in a year may cross six million by 2027. The sales value may increase during the forecast period as the cost of EV components is expected to decline. This is because market players are less reliant on imports and plan to incorporate local components to access government subsidies and bring down the ownership cost. Furthermore, increase in the cost of petroleum in 2021 attracted the interest of several consumers in EVs.

Segment insights:

The EV market can be broadly segmented into three categories based on type of vehicle – two-wheelers, three-wheelers, and four-wheelers. Electric two-wheelers dominate the market. The segment will continue to lead during the forecast period. Four-wheelers (both, commercial and personal) are also expected to witness a massive growth during the forecast period. This is because several consumers are looking for alternatives to Internal Combustion Engine (ICE) cars and buses due to the high price of petrol and diesel. Electric three-wheelers have gained popularity in several states, including Delhi, Bihar, West Bengal, Uttar Pradesh. They are expected to witness strong growth in under-penetrated states such as Chhattisgarh, Madhya Pradesh, and Orissa.

Market Influencers:

Heavy investments from automakers, favorable government policies and subsidies, low total cost of ownership (TCO) for EVs as compared to ICEs are driving the market. Factors such as low consumer spending power outside tier I cities, slow rollout of charging infrastructure, lack of raw material limiting the domestic battery manufacturing are restricting the market growth.

COVID-19 impact analysis:

The COVID-19 pandemic has disrupted global supply chains for EV components, mainly power electronics, battery, and minerals used in these elements. Although these supply chain disruptions had short-term effect, it weighed down on the medium- to long-term EV cost reduction roadmap. However, in FY 2021, the government took several steps to boost the market. One important measure was allowing registration of electric vehicles without batteries, which improved sale of products with battery swapping technology.